How Much Should We Read Into Today's Big Reversal?

Bonds may have ended the day in negative territory, but the big story was the big reversal from even steeper losses earlier in the day.  Those, of course, followed the hotter CPI data at 8:30am and quickly pushed 10yr yields as high as 4.08.  By 130pm, they'd rallied back roughly 18bps and managed to end the day around 3.95%.  MBS lost less than an eighth of a point after being down more than an entire point.  Today's video discusses whether we should read any significance into this reversal.  

Econ Data / Events
    • Headline CPI mm
      • 0.4 vs 0.2 f'cast, 0.1 prev
    • Core CPI mm
      • 0.6 vs 0.5 f'cast, 0.6 prev
Market Movement Recap
08:21 AM

Stronger overnight on UK policy U-turn.  Another glut of buying at the 8:20am CME open.  10yr down 5.3bps at 3.85.  MBS up only an eighth of a point, but the day is very young and liquidity non-existent just yet.

09:37 AM

Massive post-CPI sell-off just now leveling off with 10yr yields ultimately tapping 4.08%, now up only 14bps at 4.042%. MBS are down over a point.

11:22 AM

Nice little comeback with more than half of the weakness erased.  MBS are down less than 3/8ths now after being more than point lower earlier.  10yr up only 5.8bps after being up 18bps at the highs of the day

01:03 PM

No major drama after 30yr bond auction.  Results were mixed.  10yr yield up 4.7bps on the day at 3.948.  MBS down about 10 ticks (.31). 

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